Vivendi Spin-Out is Music to Investors’ Ears

Image Credit: Vivendi

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Au revoir, Lady Gaga.

Vivendi, the French media conglomerate controlled by the billionaire Bolloré family, has announced plans to spin-off Universal Music Group.

If completed, the UMG IPO would create the largest publicly-listed music label.

What’s At Play

Universal Music Group is one of the “Big Three” labels and represents some of the biggest names in music including Lady Gaga and Justin Beiber.

Business has been literally and figuratively boomin’ with streaming service momentum (Spotify and Apple Music) and social apps (TikTok and Instagram) hungry to license songs to spice-up users’ cat videos.

Vivendi Discount: At the French powerhouse, analysts and investors have long speculated the company is suffering from the so-called “conglomerate discount,” where it trades for less than the value of its component parts.

To rectify the discount, Vivendi plans to distribute 60% of UMG’s stock to its existing investors and retain 20% for itself.
The remaining company will be a skinnied-down operation with firepower to make acquisitions in publishing, television, and communications.

Singing A Pleasant Tune: The Bolloré family rebuffed an offer from SoftBank to acquire UMG for to acquire UMG for €6.5 billion back in 2013. A recent deal to sell a 10% stake to Chinese tech giant Tencent valued UMG at €30 billion. The sound of success.